Ann Bennett - KELLER WILLIAMS REALTY / Metropolitan



Posted by Ann Bennett on 9/27/2018

If you are thinking of buying your first home, youíre thinking of making the single biggest purchase of your entire lifetime. Real estate is complex. From getting finances in order to understanding the entire process to securing the home you love, thereís so much that youíll need to know when it comes to buying your first home. 


What Is A Down Payment?


A down payment is a one-time cash payment that youíll provide at the closing table when you buy a home. How much your down payment is will have an effect on how much your monthly mortgage payment will be. It will also affect your initial home equity value. 


Should You Keep Renting?


First, youíll need to think of a savings goal and a timeline. The general rule is that if you own a home for at least 5 years, you have gotten your ďmoneyís worthĒ out of the closing costs and the fees you paid at the time you purchased your home. If you donít think youíll stay in a home for at least 5 years before making another move, you may want to consider renting until you know where you want to settle. 


What Can You Afford? 


Youíll need to calculate just how much home you can afford. Look at potential monthly mortgage payments plus taxes, fees, insurance, utilities and other monthly expenses that you have.


In dual-income households, itís nice if the living expenses can be covered just by one personís paycheck. Once you have an idea of your budget, you can price out homes that will meet your needs and be in your price range. 


Why You Should Save More


The best practice in buying a home is to put 20% down on the house. With this sizable down payment, it will be easier to get approved for a mortgage. Youíll also avoid needing PMI (private mortgage insurance.) This is an additional cost for people who put down less than a 20% down payment. This can cost you a lot of money each month, so itís best to save as much as you can for that initial down payment. 


Donít be discouraged. You can still buy a home with a lower percentage of a down payment, but youíll have to pay for the PMI and include the additional expense in your budget. The Federal Housing Administration has many different options available that allow you to put a smaller down payment on a home, so do your homework.  


How To Save 

           

Once you get an idea of about how much youíll spend on your home, you need to take action and start saving. There are many ways that you can save automatically without even thinking about it. You can choose a fixed amount or percentage of your paycheck and save it automatically into the house fund. Save as much as you can so youíll be able to make your home purchase more quickly. You may even want to consider putting your money into a money market account for a higher return on your savings once you reach a certain goal. 


Donít Forget To Save Your Bonuses


Whether you have received a gift or a sizable Christmas bonus, make sure that you put that money away towards your home purchase. Every little bit helps. While we may have an inclination to want to spend the money on more immediate things, youíll be happy that you saved your money when you head to purchase your house! 


Use Your IRA


The IRS allows a tax benefit for first time home buyers. You can take out up to $10,000 out of your IRA or Roth IRA for a first time home purchase. Your Roth IRA account must be at least 5 years old in order for you to do this. Distributions from this account are tax-free, but youíll need to pay tax if you withdraw form a traditional IRA. You should discuss any withdrawals that you do make with your financial advisor and your tax advisor. This could be an opportunity for you to build your wealth in a new way, so make an informed decision. 


Happy saving and happy house hunting!





Posted by Ann Bennett on 2/19/2017

Purchasing a home is a sign of new financial responsibility for many people. The leap into homeownership is a big and important step. Finding a home and securing a mortgage isnít easy. Getting ready to take on a mortgage can require a lot of research and education on your part. Before you get too confused, youíll need to learn the basics of a mortgage and what you should know before you apply. 


Be Prepared


This is probably the best advice for any first time homebuyer. Find some good lenders in your area. You can sit down with a lender and talk about your goals. The bank will be able to explain all of the costs and fees associated with buying a home ahead of time. This way, youíll know exactly what to expect when you head into a purchase contract without any surprises. 


Whatís Involved In A Loan? 


Each mortgage is a different situation. This is why meeting with a lender ahead of time is a good idea. Your real estate agent can suggest a mortgage lender if you donít have one in mind. No one will be happier for you than your real estate agent if you have a smooth real estate transaction. Youíll be able to walk through the mortgage process step by step with a loan officer and understand the specifics of your own scenario.


What Youíll Need For A Mortgage


Thereís a few things that youíll need to have ready before you can even begin searching for a home. 


Cash For A Down Payment


Youíll need to save up a bit of cash before you know that youíre ready to buy a home. Itís recommended that you have at least 20 percent of the purchase price of a home to put down towards your loan initially.   



A Good Working Knowledge Of Personal Finances


You should have an understanding of your own finances in order to buy a home. Not only will this help you save, but it will help you to ensure that youíre not going to overextend yourself financially after you secure the mortgage. To get your finances in order, honestly record all of your monthly expenses and spending habits, so you know exactly what you can afford.   


The Price Range Of Homes Youíre Interested In 


If you have an idea of what kind of home youíd like, it will make your entire house shopping experience a lot easier. Youíll be able to see exactly what you can afford and how much you need to save. When your wish list equates to half-million dollar homes, and you find that you can only afford around $300,000, you donít need to go into shock! Itís good to have an idea of how much house you can afford and what it will get you. When you do a little homework, youíll discover that buying a home isnít such a hard process when youíre prepared!







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